Brandes Looks for Undervalued Stocks; Today, His Big Positions Are Certainly Valued Low in the Market

San Diego's Brandes Investment Partners, which manages $125 billion of investors' money, looks for undervalued stocks. The stocks in which Charles Brandes's firm has big positions are certainly valued low in today's market, and as of now, Brandes has big losses. On Sept. 30 of last year, the firm reported that it owned a big chunk of McClatchy, the newspaper chain. The stock was selling for $20.04 then; now it's $10.35. Brandes owns 9.95 percent of the company now. At the same time, Brandes said it owned a slug of the largest newspaper chain, Gannett. The stock has come down from $43.70 to $33.72 today. Brandes has 10.17 percent of Gannett. It looks like Brandes will lose a bundle in Countrywide, the big, troubled mortgage peddler. Brandes reported it owned 7.9 percent of the company on Sept. 30 of last year, when the stock was at $19.74. On Jan. 11, the company agreed to be bought by Bank of America for $7.16 a share. Now it's selling for $6.84. Today's Wall Street Journal reported that Brandes had $1 billion in Alcatel-Lucent at last year's end, when it was selling for $7.32 Now it's $6.25. Charles Brandes has completed a 54,000 square foot home on 30 acres in Rancho Santa Fe, where he lives with his new, beautiful wife. Forbes Magazine, which lists Charles Brandes among the 400 richest Americans, says the home is worth $60 million. Brandes tells tax authorities it is worth less.

Response to post #1: Yes, Sallie Mae would have been much worse. He could have done worse in several other kinds of stocks. Value investors often look bad for awhile before they look good. However, I don't think Brandes has much chance of looking good in either Countrywide or McClatchy. But he could do well in Gannett and Alcatel-Lucent. Best, Don Bauder

“The biggest problem, of course, had nothing to do with the newsrooms. It was the collapse of an unsustainable business model. Simply put, the model involved sending miniskirted saleswomen out to sell ads at confiscatory rates to lecherous old car dealers and appliance-store owners. Protecting these profits, whether from national, local or classified ads, became the central focus of newspaper bosses. These areas were the most vulnerable to new competitors. But the condition of the industry by the 1990s – risk averse, promising unrealistic margins, losing its best talent, ignoring ideas outside its preconceived notions – left it unable to meet these threats.”

Response to post #3: Zell basically stole the Tribune, parent of LA Times. Zell hardly put any of his own money in. The debt is selling for a discount of something like 25 percent on that deal. Tribune now wildly overleveraged. Employees supposedly own it. Fraud. Best, Don Bauder

Response to post #4: I got to the San Diego Union in 1973. By then, the miniskirt craze was just about over. In any case, Copley used, and still uses, sobersided men, for the most part, to sell ads. The newspaper model is definitely out of date, but don't blame it on miniskirted lasses selling ads to lechers. The demographics, societal changes (youth not reading, e.g.) and technology just left the industry in the dust. And few saw it coming until the late 1990s, yet the handwriting was on the wall in the mid-1980s. Best, Don Bauder